KUALA LUMPUR — Dec. 19, 2018: The Employees Provident Fund’s (EPF) total investment income for the third quarter ended last September 30 rose 12.82 per cent to RM14.61 billion driven by recovery in Malaysia and Asean equities, while developed market equities continued to record positive growth.
According to Deputy Chief Executive Officer (Investment) Datuk Mohamad Nasir Ab. Latif, the third quarter saw EPF navigating a volatile market condition, which was fuelled by trade tensions between China and the United States.
Volatility was increasingly felt across the region, in which there was a decline in regional equity markets in the fourth quarter. This will certainly pose a huge challenge to EPF to sustain the same income momentum for the fourth quarter, said Mohamad in a statement today.
In Q3, equities made up 40.67 per cent of the agency’s total investment assets, contributing RM8.89 billion and representing 60.81 per cent of total investment income.
A total of 50.72 per cent of investment assets were in fixed income instruments, which continued to provide consistent and stable income, reduce overall risks and protect against volatility of the fund’s portfolio, in line with the EPF being a balanced fund.
Fixed income investments recorded RM4.73 billion in Q3, equivalent to 32.40 per cent of the quarterly investment income.
Other contributors were Malaysian government securities and equivalent (RM2.50 billion), loans and bonds (RM2.24 billion), real estate and infrastructure (RM726.23 million) and money market instruments (RM265.39 million).
A total of RM1.33 billion of the total income was generated for shariah saving and RM13.28 billion for conventional saving.
Mohamad said that in accordance with the implementation of the Malaysian Financial Reporting Standards 9 (MFRS 9) from January 1 this year, capital gains on disposal of equity amounting to RM5.17 billion for Q3 would flow directly to retained earnings from the statement of other comprehensive income.This was as opposed to the statement of profit or loss under the previous financial reporting standard.
In addition, under MFRS 9, EPF will no longer recognise any impairment on its equity holdings.
EPF remains cautious of the uncertain external environment such as the US-China trade tensions, weaker commodity prices and the US interest rate hike, as well as the challenging domestic equities market. — Bernama